GSE limits slated to drop (PLUS bonus question for mortgage experts)

[sdrealtor]

A speck of dust blowing in the wind has an influence. Things that have small to no influence are easily counterbalanced by other factors. I only concern myself with thiings that have significant influences in the face of all other things.

[CA renter]

[quote=earlyretirement][quote=Rich Toscano]Right, nobody can argue that it’s a positive, but is it a significant negative?

sdr says no, that it’s the same to qualify for both types of loans. But for instance sdr, I’ve heard that down payment requirements are higher for non-conforming loans… if this is true, (even if “qualifying” is otherwise the same), that represents a tightening of financing for this price range. Any idea whether that’s the case?[/quote]

Hey Rich,

I think “significant” can be a bit relative. I don’t necessarily think it will be too significant on it’s own. But when you couple it with everything else that is going on at the same time including a tighter credit environment, continued unemployment and a potential start to a Bear stock market and correction of commodities and couple those things all together and I think it’s going to add up. But I too am not sure how significant it will be.

And I was more speaking on the national scale vs. just San Diego but definitely I see it having an effect in that price range you mentioned for San Diego as well.

sdr sounds like he is hanging around the wealthy crowd, which I admit there is plenty of in San Diego. However, there are a lot of pikers out there as well. From the outside looking in, they might appear to have money or at least a healthy net worth… but it’s all smoke and mirrors and they are leveraged to the hilt.

Some times you don’t even know about it (even if it’s your neighbors) until you read about them losing their houses.

I think people really underestimate all of the negative equity out there. People are finally starting to realize just how many people have a $0 net worth (or even a negative $0 net worth).

The trends don’t look too good for the rest of 2011. I’m not sure how even the biggest bull could try to argue on that one.

The government WILL eventually ease out of supporting the housing market and when they do it will be ugly. It might take a few years but I do believe it will happen. Personally, I wouldn’t mind seeing them get rid of the interest exemption as well.[/quote]

Could not agree more. I’ve seen too many people who put on a pretty decent show of looking “rich,” only to find out it was all a matter of leverage. They’ll tell you all about their “how much they made,” but forget about how much they’ve spent — oftentimes, it’s far more than they made. These are the people with the fancy cars, fancy houses, fancy jewelry and watches, etc. Personally, I’ve found that a good number of people who try so hard to impress others with their “wealth” often have a negative net worth.

For example, who’s to say sdr’s hedge fund partner actually had $25MM, herself? How much of that came from her own account, and how much was from other “investors”?

[CA renter]

[quote=earlyretirement][quote=Rich Toscano]Right, nobody can argue that it’s a positive, but is it a significant negative?

sdr says no, that it’s the same to qualify for both types of loans. But for instance sdr, I’ve heard that down payment requirements are higher for non-conforming loans… if this is true, (even if “qualifying” is otherwise the same), that represents a tightening of financing for this price range. Any idea whether that’s the case?[/quote]

Hey Rich,

I think “significant” can be a bit relative. I don’t necessarily think it will be too significant on it’s own. But when you couple it with everything else that is going on at the same time including a tighter credit environment, continued unemployment and a potential start to a Bear stock market and correction of commodities and couple those things all together and I think it’s going to add up. But I too am not sure how significant it will be.

And I was more speaking on the national scale vs. just San Diego but definitely I see it having an effect in that price range you mentioned for San Diego as well.

sdr sounds like he is hanging around the wealthy crowd, which I admit there is plenty of in San Diego. However, there are a lot of pikers out there as well. From the outside looking in, they might appear to have money or at least a healthy net worth… but it’s all smoke and mirrors and they are leveraged to the hilt.

Some times you don’t even know about it (even if it’s your neighbors) until you read about them losing their houses.

I think people really underestimate all of the negative equity out there. People are finally starting to realize just how many people have a $0 net worth (or even a negative $0 net worth).

The trends don’t look too good for the rest of 2011. I’m not sure how even the biggest bull could try to argue on that one.

The government WILL eventually ease out of supporting the housing market and when they do it will be ugly. It might take a few years but I do believe it will happen. Personally, I wouldn’t mind seeing them get rid of the interest exemption as well.[/quote]

Could not agree more. I’ve seen too many people who put on a pretty decent show of looking “rich,” only to find out it was all a matter of leverage. They’ll tell you all about their “how much they made,” but forget about how much they’ve spent — oftentimes, it’s far more than they made. These are the people with the fancy cars, fancy houses, fancy jewelry and watches, etc. Personally, I’ve found that a good number of people who try so hard to impress others with their “wealth” often have a negative net worth.

For example, who’s to say sdr’s hedge fund partner actually had $25MM, herself? How much of that came from her own account, and how much was from other “investors”?

[CA renter]

[quote=earlyretirement][quote=Rich Toscano]Right, nobody can argue that it’s a positive, but is it a significant negative?

sdr says no, that it’s the same to qualify for both types of loans. But for instance sdr, I’ve heard that down payment requirements are higher for non-conforming loans… if this is true, (even if “qualifying” is otherwise the same), that represents a tightening of financing for this price range. Any idea whether that’s the case?[/quote]

Hey Rich,

I think “significant” can be a bit relative. I don’t necessarily think it will be too significant on it’s own. But when you couple it with everything else that is going on at the same time including a tighter credit environment, continued unemployment and a potential start to a Bear stock market and correction of commodities and couple those things all together and I think it’s going to add up. But I too am not sure how significant it will be.

And I was more speaking on the national scale vs. just San Diego but definitely I see it having an effect in that price range you mentioned for San Diego as well.

sdr sounds like he is hanging around the wealthy crowd, which I admit there is plenty of in San Diego. However, there are a lot of pikers out there as well. From the outside looking in, they might appear to have money or at least a healthy net worth… but it’s all smoke and mirrors and they are leveraged to the hilt.

Some times you don’t even know about it (even if it’s your neighbors) until you read about them losing their houses.

I think people really underestimate all of the negative equity out there. People are finally starting to realize just how many people have a $0 net worth (or even a negative $0 net worth).

The trends don’t look too good for the rest of 2011. I’m not sure how even the biggest bull could try to argue on that one.

The government WILL eventually ease out of supporting the housing market and when they do it will be ugly. It might take a few years but I do believe it will happen. Personally, I wouldn’t mind seeing them get rid of the interest exemption as well.[/quote]

Could not agree more. I’ve seen too many people who put on a pretty decent show of looking “rich,” only to find out it was all a matter of leverage. They’ll tell you all about their “how much they made,” but forget about how much they’ve spent — oftentimes, it’s far more than they made. These are the people with the fancy cars, fancy houses, fancy jewelry and watches, etc. Personally, I’ve found that a good number of people who try so hard to impress others with their “wealth” often have a negative net worth.

For example, who’s to say sdr’s hedge fund partner actually had $25MM, herself? How much of that came from her own account, and how much was from other “investors”?

[CA renter]

[quote=earlyretirement][quote=Rich Toscano]Right, nobody can argue that it’s a positive, but is it a significant negative?

sdr says no, that it’s the same to qualify for both types of loans. But for instance sdr, I’ve heard that down payment requirements are higher for non-conforming loans… if this is true, (even if “qualifying” is otherwise the same), that represents a tightening of financing for this price range. Any idea whether that’s the case?[/quote]

Hey Rich,

I think “significant” can be a bit relative. I don’t necessarily think it will be too significant on it’s own. But when you couple it with everything else that is going on at the same time including a tighter credit environment, continued unemployment and a potential start to a Bear stock market and correction of commodities and couple those things all together and I think it’s going to add up. But I too am not sure how significant it will be.

And I was more speaking on the national scale vs. just San Diego but definitely I see it having an effect in that price range you mentioned for San Diego as well.

sdr sounds like he is hanging around the wealthy crowd, which I admit there is plenty of in San Diego. However, there are a lot of pikers out there as well. From the outside looking in, they might appear to have money or at least a healthy net worth… but it’s all smoke and mirrors and they are leveraged to the hilt.

Some times you don’t even know about it (even if it’s your neighbors) until you read about them losing their houses.

I think people really underestimate all of the negative equity out there. People are finally starting to realize just how many people have a $0 net worth (or even a negative $0 net worth).

The trends don’t look too good for the rest of 2011. I’m not sure how even the biggest bull could try to argue on that one.

The government WILL eventually ease out of supporting the housing market and when they do it will be ugly. It might take a few years but I do believe it will happen. Personally, I wouldn’t mind seeing them get rid of the interest exemption as well.[/quote]

Could not agree more. I’ve seen too many people who put on a pretty decent show of looking “rich,” only to find out it was all a matter of leverage. They’ll tell you all about their “how much they made,” but forget about how much they’ve spent — oftentimes, it’s far more than they made. These are the people with the fancy cars, fancy houses, fancy jewelry and watches, etc. Personally, I’ve found that a good number of people who try so hard to impress others with their “wealth” often have a negative net worth.

For example, who’s to say sdr’s hedge fund partner actually had $25MM, herself? How much of that came from her own account, and how much was from other “investors”?

[CA renter]

[quote=earlyretirement][quote=Rich Toscano]Right, nobody can argue that it’s a positive, but is it a significant negative?

sdr says no, that it’s the same to qualify for both types of loans. But for instance sdr, I’ve heard that down payment requirements are higher for non-conforming loans… if this is true, (even if “qualifying” is otherwise the same), that represents a tightening of financing for this price range. Any idea whether that’s the case?[/quote]

Hey Rich,

I think “significant” can be a bit relative. I don’t necessarily think it will be too significant on it’s own. But when you couple it with everything else that is going on at the same time including a tighter credit environment, continued unemployment and a potential start to a Bear stock market and correction of commodities and couple those things all together and I think it’s going to add up. But I too am not sure how significant it will be.

And I was more speaking on the national scale vs. just San Diego but definitely I see it having an effect in that price range you mentioned for San Diego as well.

sdr sounds like he is hanging around the wealthy crowd, which I admit there is plenty of in San Diego. However, there are a lot of pikers out there as well. From the outside looking in, they might appear to have money or at least a healthy net worth… but it’s all smoke and mirrors and they are leveraged to the hilt.

Some times you don’t even know about it (even if it’s your neighbors) until you read about them losing their houses.

I think people really underestimate all of the negative equity out there. People are finally starting to realize just how many people have a $0 net worth (or even a negative $0 net worth).

The trends don’t look too good for the rest of 2011. I’m not sure how even the biggest bull could try to argue on that one.

The government WILL eventually ease out of supporting the housing market and when they do it will be ugly. It might take a few years but I do believe it will happen. Personally, I wouldn’t mind seeing them get rid of the interest exemption as well.[/quote]

Could not agree more. I’ve seen too many people who put on a pretty decent show of looking “rich,” only to find out it was all a matter of leverage. They’ll tell you all about their “how much they made,” but forget about how much they’ve spent — oftentimes, it’s far more than they made. These are the people with the fancy cars, fancy houses, fancy jewelry and watches, etc. Personally, I’ve found that a good number of people who try so hard to impress others with their “wealth” often have a negative net worth.

For example, who’s to say sdr’s hedge fund partner actually had $25MM, herself? How much of that came from her own account, and how much was from other “investors”?

[CA renter]

[quote=Ren][quote=bearishgurl]ER, I don’t see how there could be a “trickle down” effect of lowered values to La Playa San Diego (92106) or Del Mar Village because a homeowner in SantaLuz (92127) or Scripps Ranch San Diego (92131) lost their (valued at over $680K) property to foreclosure.[/quote]

I know this isn’t exactly on topic but… what some of the more bullish among you are forgetting is that there is no wall around the nicer areas. The change from less desirable to better neighborhoods can be very gradual, and the sale of a nice 4/3 in a slightly less desirable neighborhood is a comp for a similar 4/3 a half mile away in a slightly nicer neighborhood. That house is a comp for a 4/3 in an even nicer neighborhood another half mile away. Repeat a dozen times until you’re smack in the middle of one of our magical coastal communities, and the same size 4/3 is worth twice what the first house is – but it was affected by that first sale, period. There is no appraisal force field around La Jolla.

Like many others, I’m willing to pay a lot more to live in south Carlsbad than Vista. A LOT more. Those areas will always command a premium, and may even be close to their bottom – but what you can’t argue is that those areas aren’t affected by price drops in less desirable areas. Of course it depends on how much people (like me) are willing and able to pay for a nice area (that’s why they command a premium in the first place), but ultimately the sale price also depends on the appraisal and comps (and therefore indirectly, government intervention). No, a big drop in a less desireable area is not going to pound the prices in a nice area, because nicer areas fluctuate less, and rise and fall at different rates. But it does make some impact. That’s all I’m sayin’.

It’s okay to admit that – it doesn’t change the fact that Del Mar is still waaaaay better than Escondido and may be close to being priced right.

Yes, I’m becoming more bullish in my old age.[/quote]

Exactly.

Like you, we’re willing to pay more to live in certain areas, but we’re not willing to pay twice as much for an inferior house/lot/neighborhood (there are better neighborhoods in some parts of Escondido than Encinitas, for instance, even if it’s further away from the ocean). We are most certainly weighing every aspect of the house/lot/location against the price. Not everyone is willing to significantly overpay just because a house is closer to the ocean.

[CA renter]

[quote=Ren][quote=bearishgurl]ER, I don’t see how there could be a “trickle down” effect of lowered values to La Playa San Diego (92106) or Del Mar Village because a homeowner in SantaLuz (92127) or Scripps Ranch San Diego (92131) lost their (valued at over $680K) property to foreclosure.[/quote]

I know this isn’t exactly on topic but… what some of the more bullish among you are forgetting is that there is no wall around the nicer areas. The change from less desirable to better neighborhoods can be very gradual, and the sale of a nice 4/3 in a slightly less desirable neighborhood is a comp for a similar 4/3 a half mile away in a slightly nicer neighborhood. That house is a comp for a 4/3 in an even nicer neighborhood another half mile away. Repeat a dozen times until you’re smack in the middle of one of our magical coastal communities, and the same size 4/3 is worth twice what the first house is – but it was affected by that first sale, period. There is no appraisal force field around La Jolla.

Like many others, I’m willing to pay a lot more to live in south Carlsbad than Vista. A LOT more. Those areas will always command a premium, and may even be close to their bottom – but what you can’t argue is that those areas aren’t affected by price drops in less desirable areas. Of course it depends on how much people (like me) are willing and able to pay for a nice area (that’s why they command a premium in the first place), but ultimately the sale price also depends on the appraisal and comps (and therefore indirectly, government intervention). No, a big drop in a less desireable area is not going to pound the prices in a nice area, because nicer areas fluctuate less, and rise and fall at different rates. But it does make some impact. That’s all I’m sayin’.

It’s okay to admit that – it doesn’t change the fact that Del Mar is still waaaaay better than Escondido and may be close to being priced right.

Yes, I’m becoming more bullish in my old age.[/quote]

Exactly.

Like you, we’re willing to pay more to live in certain areas, but we’re not willing to pay twice as much for an inferior house/lot/neighborhood (there are better neighborhoods in some parts of Escondido than Encinitas, for instance, even if it’s further away from the ocean). We are most certainly weighing every aspect of the house/lot/location against the price. Not everyone is willing to significantly overpay just because a house is closer to the ocean.

[CA renter]

[quote=Ren][quote=bearishgurl]ER, I don’t see how there could be a “trickle down” effect of lowered values to La Playa San Diego (92106) or Del Mar Village because a homeowner in SantaLuz (92127) or Scripps Ranch San Diego (92131) lost their (valued at over $680K) property to foreclosure.[/quote]

I know this isn’t exactly on topic but… what some of the more bullish among you are forgetting is that there is no wall around the nicer areas. The change from less desirable to better neighborhoods can be very gradual, and the sale of a nice 4/3 in a slightly less desirable neighborhood is a comp for a similar 4/3 a half mile away in a slightly nicer neighborhood. That house is a comp for a 4/3 in an even nicer neighborhood another half mile away. Repeat a dozen times until you’re smack in the middle of one of our magical coastal communities, and the same size 4/3 is worth twice what the first house is – but it was affected by that first sale, period. There is no appraisal force field around La Jolla.

Like many others, I’m willing to pay a lot more to live in south Carlsbad than Vista. A LOT more. Those areas will always command a premium, and may even be close to their bottom – but what you can’t argue is that those areas aren’t affected by price drops in less desirable areas. Of course it depends on how much people (like me) are willing and able to pay for a nice area (that’s why they command a premium in the first place), but ultimately the sale price also depends on the appraisal and comps (and therefore indirectly, government intervention). No, a big drop in a less desireable area is not going to pound the prices in a nice area, because nicer areas fluctuate less, and rise and fall at different rates. But it does make some impact. That’s all I’m sayin’.

It’s okay to admit that – it doesn’t change the fact that Del Mar is still waaaaay better than Escondido and may be close to being priced right.

Yes, I’m becoming more bullish in my old age.[/quote]

Exactly.

Like you, we’re willing to pay more to live in certain areas, but we’re not willing to pay twice as much for an inferior house/lot/neighborhood (there are better neighborhoods in some parts of Escondido than Encinitas, for instance, even if it’s further away from the ocean). We are most certainly weighing every aspect of the house/lot/location against the price. Not everyone is willing to significantly overpay just because a house is closer to the ocean.

[CA renter]

[quote=Ren][quote=bearishgurl]ER, I don’t see how there could be a “trickle down” effect of lowered values to La Playa San Diego (92106) or Del Mar Village because a homeowner in SantaLuz (92127) or Scripps Ranch San Diego (92131) lost their (valued at over $680K) property to foreclosure.[/quote]

I know this isn’t exactly on topic but… what some of the more bullish among you are forgetting is that there is no wall around the nicer areas. The change from less desirable to better neighborhoods can be very gradual, and the sale of a nice 4/3 in a slightly less desirable neighborhood is a comp for a similar 4/3 a half mile away in a slightly nicer neighborhood. That house is a comp for a 4/3 in an even nicer neighborhood another half mile away. Repeat a dozen times until you’re smack in the middle of one of our magical coastal communities, and the same size 4/3 is worth twice what the first house is – but it was affected by that first sale, period. There is no appraisal force field around La Jolla.

Like many others, I’m willing to pay a lot more to live in south Carlsbad than Vista. A LOT more. Those areas will always command a premium, and may even be close to their bottom – but what you can’t argue is that those areas aren’t affected by price drops in less desirable areas. Of course it depends on how much people (like me) are willing and able to pay for a nice area (that’s why they command a premium in the first place), but ultimately the sale price also depends on the appraisal and comps (and therefore indirectly, government intervention). No, a big drop in a less desireable area is not going to pound the prices in a nice area, because nicer areas fluctuate less, and rise and fall at different rates. But it does make some impact. That’s all I’m sayin’.

It’s okay to admit that – it doesn’t change the fact that Del Mar is still waaaaay better than Escondido and may be close to being priced right.

Yes, I’m becoming more bullish in my old age.[/quote]

Exactly.

Like you, we’re willing to pay more to live in certain areas, but we’re not willing to pay twice as much for an inferior house/lot/neighborhood (there are better neighborhoods in some parts of Escondido than Encinitas, for instance, even if it’s further away from the ocean). We are most certainly weighing every aspect of the house/lot/location against the price. Not everyone is willing to significantly overpay just because a house is closer to the ocean.

[CA renter]

[quote=Ren][quote=bearishgurl]ER, I don’t see how there could be a “trickle down” effect of lowered values to La Playa San Diego (92106) or Del Mar Village because a homeowner in SantaLuz (92127) or Scripps Ranch San Diego (92131) lost their (valued at over $680K) property to foreclosure.[/quote]

I know this isn’t exactly on topic but… what some of the more bullish among you are forgetting is that there is no wall around the nicer areas. The change from less desirable to better neighborhoods can be very gradual, and the sale of a nice 4/3 in a slightly less desirable neighborhood is a comp for a similar 4/3 a half mile away in a slightly nicer neighborhood. That house is a comp for a 4/3 in an even nicer neighborhood another half mile away. Repeat a dozen times until you’re smack in the middle of one of our magical coastal communities, and the same size 4/3 is worth twice what the first house is – but it was affected by that first sale, period. There is no appraisal force field around La Jolla.

Like many others, I’m willing to pay a lot more to live in south Carlsbad than Vista. A LOT more. Those areas will always command a premium, and may even be close to their bottom – but what you can’t argue is that those areas aren’t affected by price drops in less desirable areas. Of course it depends on how much people (like me) are willing and able to pay for a nice area (that’s why they command a premium in the first place), but ultimately the sale price also depends on the appraisal and comps (and therefore indirectly, government intervention). No, a big drop in a less desireable area is not going to pound the prices in a nice area, because nicer areas fluctuate less, and rise and fall at different rates. But it does make some impact. That’s all I’m sayin’.

It’s okay to admit that – it doesn’t change the fact that Del Mar is still waaaaay better than Escondido and may be close to being priced right.

Yes, I’m becoming more bullish in my old age.[/quote]

Exactly.

Like you, we’re willing to pay more to live in certain areas, but we’re not willing to pay twice as much for an inferior house/lot/neighborhood (there are better neighborhoods in some parts of Escondido than Encinitas, for instance, even if it’s further away from the ocean). We are most certainly weighing every aspect of the house/lot/location against the price. Not everyone is willing to significantly overpay just because a house is closer to the ocean.

[CA renter]

[quote=sdrealtor]Ren
To echo BG’s thoughts it doesnt work that way in tracts either. Comps from the neighborhood. In early 2009, homes in oceanside were selling for under $200K but that had no impact on where I live in South Carlsbad. Most of the people looking here are looking in similar markets like Carmel Valley, Encinitas etc. This all goes back to the butterfly theory that old time poster Bugs championed. It just hasnt worked that way at least no where near a 1:1 or even 1:3 ratio.

Around here the choice isnt I’ll just go somewhere less desireable if prices are lower there, the choice is I’ll just rent here instead of buying. It changes things a lot from what your theory would predict.[/quote]

Sdr, what you’re totally ignoring is the fact that price drops WERE moving into the “more deirable” neighborhoods. Prices don’t all move at once, they roll into and out of areas during the RE cycle. The ONLY reason prices didn’t drop as much in the higher-end areas is because the Fed and govt intervened when they saw that the housing bust wasn’t “contained” in the lower-end areas. The price drops in the lower-end areas were pretty much done by the time the interventions began (foreclosure moratoriums of various sorts, buying up of “toxic” debt, govt takeover/expanded portfolios of the GSEs, massive interest rate interventions so that people could afford to refi into govt-backed mortgages, etc.). If you think prices would have stayed where they are without all the bailouts/interventions, then why do you think they wasted trillions of dollars on these programs?

[CA renter]

[quote=sdrealtor]Ren
To echo BG’s thoughts it doesnt work that way in tracts either. Comps from the neighborhood. In early 2009, homes in oceanside were selling for under $200K but that had no impact on where I live in South Carlsbad. Most of the people looking here are looking in similar markets like Carmel Valley, Encinitas etc. This all goes back to the butterfly theory that old time poster Bugs championed. It just hasnt worked that way at least no where near a 1:1 or even 1:3 ratio.

Around here the choice isnt I’ll just go somewhere less desireable if prices are lower there, the choice is I’ll just rent here instead of buying. It changes things a lot from what your theory would predict.[/quote]

Sdr, what you’re totally ignoring is the fact that price drops WERE moving into the “more deirable” neighborhoods. Prices don’t all move at once, they roll into and out of areas during the RE cycle. The ONLY reason prices didn’t drop as much in the higher-end areas is because the Fed and govt intervened when they saw that the housing bust wasn’t “contained” in the lower-end areas. The price drops in the lower-end areas were pretty much done by the time the interventions began (foreclosure moratoriums of various sorts, buying up of “toxic” debt, govt takeover/expanded portfolios of the GSEs, massive interest rate interventions so that people could afford to refi into govt-backed mortgages, etc.). If you think prices would have stayed where they are without all the bailouts/interventions, then why do you think they wasted trillions of dollars on these programs?

[CA renter]

[quote=sdrealtor]Ren
To echo BG’s thoughts it doesnt work that way in tracts either. Comps from the neighborhood. In early 2009, homes in oceanside were selling for under $200K but that had no impact on where I live in South Carlsbad. Most of the people looking here are looking in similar markets like Carmel Valley, Encinitas etc. This all goes back to the butterfly theory that old time poster Bugs championed. It just hasnt worked that way at least no where near a 1:1 or even 1:3 ratio.

Around here the choice isnt I’ll just go somewhere less desireable if prices are lower there, the choice is I’ll just rent here instead of buying. It changes things a lot from what your theory would predict.[/quote]

Sdr, what you’re totally ignoring is the fact that price drops WERE moving into the “more deirable” neighborhoods. Prices don’t all move at once, they roll into and out of areas during the RE cycle. The ONLY reason prices didn’t drop as much in the higher-end areas is because the Fed and govt intervened when they saw that the housing bust wasn’t “contained” in the lower-end areas. The price drops in the lower-end areas were pretty much done by the time the interventions began (foreclosure moratoriums of various sorts, buying up of “toxic” debt, govt takeover/expanded portfolios of the GSEs, massive interest rate interventions so that people could afford to refi into govt-backed mortgages, etc.). If you think prices would have stayed where they are without all the bailouts/interventions, then why do you think they wasted trillions of dollars on these programs?

[CA renter]

[quote=sdrealtor]Ren
To echo BG’s thoughts it doesnt work that way in tracts either. Comps from the neighborhood. In early 2009, homes in oceanside were selling for under $200K but that had no impact on where I live in South Carlsbad. Most of the people looking here are looking in similar markets like Carmel Valley, Encinitas etc. This all goes back to the butterfly theory that old time poster Bugs championed. It just hasnt worked that way at least no where near a 1:1 or even 1:3 ratio.

Around here the choice isnt I’ll just go somewhere less desireable if prices are lower there, the choice is I’ll just rent here instead of buying. It changes things a lot from what your theory would predict.[/quote]

Sdr, what you’re totally ignoring is the fact that price drops WERE moving into the “more deirable” neighborhoods. Prices don’t all move at once, they roll into and out of areas during the RE cycle. The ONLY reason prices didn’t drop as much in the higher-end areas is because the Fed and govt intervened when they saw that the housing bust wasn’t “contained” in the lower-end areas. The price drops in the lower-end areas were pretty much done by the time the interventions began (foreclosure moratoriums of various sorts, buying up of “toxic” debt, govt takeover/expanded portfolios of the GSEs, massive interest rate interventions so that people could afford to refi into govt-backed mortgages, etc.). If you think prices would have stayed where they are without all the bailouts/interventions, then why do you think they wasted trillions of dollars on these programs?

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